Mack, J.- I have had the advantage of perusing my learned brother’s Judgment and merely wish to add some observations without any unnecessary repetition of anything he has said. In 1936 the joint family of defendants 1 to 6, a respectable and substantial one in Tirunelveli District, who owned considerable property, got into serious financial difficulties. To avoid the ignominy of adjudication, they entered into a composition with creditors and later executed a trust deed Exhibit B-7 in 1937 vesting all their property in three trustees for sale and payment of creditors. They avoided approaching a regular lawyer for advice, regarding his service as only required in the event of litigation or Court proceedings. They had recourse instead to legal quack advice and obtained the services of one Piramanayakam Pillai, who not only wrote the trust deed Exhibit B-7, but also all the thirty-eight documents of alienation including the sale deeds now challenged as breaches of trust in this representative suit by creditors. This person, who has kept out of the witness box, and one Pichandi Ayyar, the 15th defendant, described as a clerk in the employ of the family of defendants 1 to 6, appear to have done most of the clerical and conveyancing work. In the background was the twelfth defendant one S.R. Koothanainar Pillai, actually and somehow strangely a civil Court amin at the time working at Ambasamudram. He was the brother of one of the three trustees. Veerabahu Pillai, a retired Inspector of Police, with substantial monies to invest. There can be no doubt that the twelfth defendant was a trustee de son tort. No less than thirteen sales of property were effected to the twelfth defendant his undivided brother Sivagurunatha Pillai the thirteenth defendant, and other relations of theirs. A common characteristic of these and several other sale deeds was the absence of any cash consideration, the vendee being merely charged with the responsibility of paying certain specified creditors at eight annas in the rupee. In some cases, where the vendee was himself a secured creditor, after the discharge of his debt a similar responsibility was placed upon him of paying unsecured creditors at this rate.
In some cases, where the vendee was himself a secured creditor, after the discharge of his debt a similar responsibility was placed upon him of paying unsecured creditors at this rate. The active part played by the twelfth defendant, who said he retired from service as amin three years before he gave his evidence as D.W. 2, is demonstrated by his negotiations with a secured creditor, the Travancore and Quilon National Bank. The discharge of this debt was a duty imposed on his undivided brother the thirteenth defendant by the sale deed Exhibit B-37, dated 29th August, 1937, in his favour alienating 20.32 acres of land for Rs.16,000. The twelfth defendant embarked on correspondence with the Bank as evidenced by Exhibits A-42, A-69 and A-107 and it was not until the Bank filed a suit, which was compromised, that this debt was finally paid on 6th August, 1941. A lawyer’s notice Exhibit B-109 sent on behalf of one creditor to the trustees on 21st July, 1937, was not replied to till 17th January, 1938, by an unsigned letter Exhibit A-58 admittedly in Piramanayakam Pillai’s writing. Apart from one or two lawyer’s notices on behalf of creditors, no regular lawyer was consulted about any of these complicated transactions. The result is that in every conceivable direction, there appear to have been grave irregularities and breaches of trust in flagrant contravention of the Trusts Act. I would like first to make some comments on what appears to me to be not merely a gross irregularity in the execution of this trust, but a grave breach not urged in the course of very elaborate arguments, and that is the alienations by the trustees with a direction to the alienees to pay specific creditors at eight annas in the rupee Clause 7 of the trust deed authorise the trustees to sell the property “with authority to impose conditions and to sell them either by public sale or by private sale for the highest price according to your discretion.” Clause 8 authorises the trustees without selling the property to allot or distribute it with the consent of the creditors according to the amount payable to them and to execute sale deeds in favour of creditors.
Under section 47 of the Trusts Act, a trustee cannot delegate his office or any of his duties either to a co-trustee or to a stranger unless (a) the instrument of trust so provides (b) the delegation is in the regular course of business or (c) the delegation is necessary or (d) the beneficiary being competent to contract, consents to the delegation. There is nothing even in this trust deed, badly drafted by a person without any legal training at all, which makes provision for the trustees delegating the power entrusted to them of paying creditors, to alienees of property. Such power of delegation cannot be inferred from anything in the trust deed. For purposes of this litigation, it is not disputed that unsecured creditors including the three representative plaintiffs suing on their behalf have received payment of 8 annas in the rupee. If the twelfth defendant took it upon himself to bargain with a secured creditor, the Travancore and Quilon National Bank and to defer payment to them for nearly four years while his brother the thirteenth defendant continued in enjoyment of the 20.32 acres of land conveyed to the thirteenth defendant under Exhibit B-37 and charged with this liability, it is reasonable to infer that the simple creditors were subjected to similar approaches and bargaining. A trust deed such as this imposes on the trustees a direct responsibility to sell property and make payments themselves to creditors. The delegation of this latter power to alienees is clearly irregular and in breach of section 47 and cannot be too strongly deprecated, opening up as it does all kinds of avenues of possible abuse. The reason why the breach of section 47 has not been stressed in this litigation doubtless arises from the fact that no creditors have complained, probably having given some acquittance that they have received eight annas in the rupee from the alienees under those sale deeds. I have taken the opportunity of emphasizing what in my view is a gross violation of section 47 of the Trusts Act by these trustees in delegating their duties under these alienations. I am in agreement with my learned brother that the two substantial sale deeds Exhibits B-94 and B-37 executed by only two out of the three trustees are invalid and do not pass to the alienees a proper title in the trust property.
I am in agreement with my learned brother that the two substantial sale deeds Exhibits B-94 and B-37 executed by only two out of the three trustees are invalid and do not pass to the alienees a proper title in the trust property. Clause 23 of the trust deed, which requires the administration of the estate to be in accordance with the unanimous opinion of the trustees or of a majority, is relied on to invest them with legality. My learned brother has translated this clause and interpreted, it, in agreement with the learned Subordinate Judge, to mean that the majority decision is binding on the trustees, who should all act in accordance with it when the law requires them to do so. I am reluctant myself to be hyper-critical in the interpretation of a clause in a document such as this drafted by a legal quack and to undermine settled transactions on the basis of too literal and strict an interpretation. There can, I think, be no doubt that clause 23 of the trust deed was intended to reproduce section 48 of the Indian Trusts Act which is couched in simple language:- “When there are more trustees than one, all must join in the execution of the trust except where the instrument of trust otherwise provides.” I have examined these two alienations even on the fotoing that the trust deed did specifically provide for the majority of the trustees only executing alienations of trust property. We have heard very elaborate arguments from Mr. Bhashyam, which my learned brother has considered in detail and have come to the conclusion following the view of Cotton and Fry, L. JJ., In re Ebsworth and Tidy’s Contract1 that the legal estate vested in the trustees can only be legally transferred by all of them executing the conveyance. Lord Esher, M.R., dissented from that view and confirmed the view taken by North, J., that a trust for sale was validly exercised in the circumstances of that case, by two out of the six liquidators executing a conveyance, in view of a Court order appointing six directors of a society as liquidators, that all the acts required or authorised by the Act of 1862 to be done by the official liquidators might be done by any two of them.
I do not propose to repeat the cogent reasons given by my learned brother, which led us to adopt the view taken by Cotton and Fry, L.JJ. Approaching this somewhat difficult question on which it is possible for more than one view to be taken, solely from the standpoint of Section 48 of the Indian Trusts Act, which must govern our decision, I am unable to see how property, which is vested in all the trustees can be legally divested by only a majority of the trustees executing a document of transfer of trust property. Mr. Bhashyam has ably argued that the words “execution of the trust” in section 48 includes execution of sale deeds of trust property, and that this trust was specifically for the purpose of selling property and paying creditors. In the administration of trusts, decisions have to be taken of an administrative character and it is not unusual to find a trust deed making a specific provision for the will of the majority to prevail. But so far as divestment of trust property which is vested in all the trustees is concerned, it can only be done by a document signed and executed by all the trustees. It is only in this domain of alienation of trust property that it is necessary in law that all trustees should join. If a trustee declines to join in such an alienation, which the majority of the trustees have decided upon in execution of the trust, the only remedy is an application to the Court to direct the other trustee or trustees to join in the execution. A trustee may have very good reasons for not consenting to an alienation of trust property, it may be, on the ground that he considers it a breach of trust. There would be manifest danger in according legal sanction to even a majority of trustees ever selling away trust property, either disregarding the wishes of one or a minority of trustees or even -without consulting them at all. Alienation of trust property is in a different category to all other acts appertaining to the execution of a trust. When one or even a small minority of trustees have any reason to decline to join in execution, it is most desirable that the Court should be approached and any dissentient trustee given an opportunity of putting forward his grounds for refusal.
When one or even a small minority of trustees have any reason to decline to join in execution, it is most desirable that the Court should be approached and any dissentient trustee given an opportunity of putting forward his grounds for refusal. It is only in this manner that a possible breach of trust can be avoided at its inception, and that proper title can be passed in trust property to bona fide alienees for consideration without apprehensions of future litigation. I have myself little doubt that had defendants 1 to 6 taken trained legal advice in this matter these gross irregularities and breaches of trust would have been avoided. It is indeed regrettable that, as this case shows, all conveyancing work or the very great bulk of it was, in 1937, and still continues to be, in the hands of quack document-writers who have received no training whatsoever for the discharge of these most responsible duties and work in a domain of uncontrolled licence and that a qualified lawyer appears to have no opportunity under our present legal system of making any contribution in this most responsible field of constructive legal work. I am in complete concurrence with the judgment which my learned brother is about to deliver. Krishnaswami Nayudu, J.-These appeals arise out of O.S. No.79 of 1947 a suit instituted on behalf of the general body of creditors for administration against the trustees and alienees of properties belonging to their debtors. Defendants 1 to 6 were members of a Hindu joint family known as Kalakkad Pannayar family in Tirunelveli district. They were doing commission agency business in petrol, kerosene and crude oil having their agency from the Burmah Shell Company. They became heavily indebted by about June 1936, when there was a pressure from the creditors which necessitated their entering into a deed of composition with their creditors. The deed of composition (Exhibit B-2) is dated 8th July, 1936 to which a substantial majority of the creditors, who totalled about 56, were parties. Under the deed of composition, the seventh defendant, a rich and respected landlord of the district, was constituted as the trustee to take over the assets and sell them to the best advantage and distribute the proceeds rateably among all the creditors.
Under the deed of composition, the seventh defendant, a rich and respected landlord of the district, was constituted as the trustee to take over the assets and sell them to the best advantage and distribute the proceeds rateably among all the creditors. On 30th July, 1936 one of the creditors Ayyah Ayyar filed a creditor’s petition, Insolvency Petition No.25 of 1936 on the file of the Sub-Court, Tirunelveli, to adjudge defendants 1 to 6 as insolvents. On 26th August, 1936, during the pendency of the insolvency proceedings, defendants 1 to 6 executed a deed of trust (Exhibit B-7) conveying all their movable and immovable properties including the outstandings to three trustees, viz., the seventh defendant, one Veerabahu., Pillai and another Narayana Pillai for the purpose of disposing of the assets and distributing the same rateably among the creditors. Defendants 8, 9 and 10 are the undivided sons of the seventh defendant. Eleventh defendant is the widow and twelfth and thirteenth defendants are the brothers of Veerabahu Pillai. Narayana Pillai died in February 1938 and Veerabahu Pillai died before the present suit. The trustees entered upon their duties in pursuance of the deed and took possession of the immovable properties. They paid off the secured creditors, and, as regards the unsecured creditors, arranged to pay 50 per cent. of their liabilities, these payments having been effected by selling the immovable properties either in favour of the creditors or in favour of third parties directing them to discharge the secured debts, and the unsecured debts to the extent of 50 per cent. of their value. Excepting the family house, where defendants 1 to 6 were living, all the other immovable properties were conveyed under the trust. The fourteenth defendant is a secured creditor having in his favour a mortgage of the first schedule properties for a sum of Rs.30,000 under Exhibit B-95 dated 3rd June, 1935 with interest at 10½ per cent. He had also lent a sum of Rs.3,000 on a pro-note with interest at 12 per cent. on 17th July, 1935, Exhibit B-95 (a). The pro-note debt was supported by the pledge of a mortgage deed executed by defendant 15, a clerk of the debtors’ family in favour of defendants 1 to 6.
He had also lent a sum of Rs.3,000 on a pro-note with interest at 12 per cent. on 17th July, 1935, Exhibit B-95 (a). The pro-note debt was supported by the pledge of a mortgage deed executed by defendant 15, a clerk of the debtors’ family in favour of defendants 1 to 6. The trustees conveyed Schedule I mortgaged properties to the fourteenth defendant for Rs.42,000 on 22nd May, 1937 by Exhibit B-94 out of which Rs.34,616 was the amount due under the mortgage Exhibit B-95 and Rs.3,418 due on the pro-note Exhibit B-95 (a) and out of the balance a sum of Rs.3,030 was directed to be paid to two of the creditors plaintiffs 2 and 3 in payment of 50 per cent. of their dues. The sale-deed in favour of the fourteenth defendant was executed by only two out of the three trustees, viz., the seventh defendant and Veerabahu Pillai. Defendants 18 to 24 are the sons of the fourteenth defendant. The seventh defendant, who was himself a trustee, was a creditor to the extent of Rs.6,000 on a pro-note, his daughter-in-law being another creditor for the sum of Rs.2,000. In respect of the total sum of Rs.8,000 and in payment of 50 per cent. of the amount, namely, Rs.4,000 the trustees conveyed Schedule III property, a house in Sivapuram, to defendants 8, 9 and 10, the undivided sons of the seventh defendant by Exhibit B-8, dated 16th December, 1936. Defendants 8, 9 and 10 m turn sold that house to the 17th Defendant, an Advocate of Tirunelveli, on 30th May, 1947 for a sum of Rs.4,000. Schedule V property was sold to the twelfth defendant on 7th November, 1941 under Exhibit B-90 for a sum of Rs.2,000. Thirteenth defendant obtained a sale of Schedule II property for Rs.15,000 on 29th August, 1937 under Exhibit B-37 which sale-deed was executed by only two out of the three trustees. There was also another sale in his favour of Schedule VIII property under Exhibit B-79, dated 6th February, 1942 for Rs.2,000. There are two sale-deeds in favour of the sixteenth defendant, who is the son-in-law of the thirteenth defendant, Exhibit B-104 and B-105, dated 7th May, 1943 and 4th June, 1943 of Schedule VII and VII (a) properties for Rs.8,000 and Rs.600 respectively. All the properties that were sold under the several documents were put in possession of the vendees.
There are two sale-deeds in favour of the sixteenth defendant, who is the son-in-law of the thirteenth defendant, Exhibit B-104 and B-105, dated 7th May, 1943 and 4th June, 1943 of Schedule VII and VII (a) properties for Rs.8,000 and Rs.600 respectively. All the properties that were sold under the several documents were put in possession of the vendees. Besides the sale referred to here, there are other sales in favour of either creditors or third parties in partial liquidation of the liabilities mentioned in the trust-deed, but they are not referred to here as there has been no dispute about those alienations. Defendants 1 to 6 instituted Original Suit No.30 of 1943 in the Sub-Court of Tirunelveli for administration of the trust, for account against the trustees and for recovery of the trust properties making the surviving trustees and the alienees as parties. A preliminary decree for account was passed by the Sub-Court, while their claim for recovery of the immovable properties was not granted. Defendants 1 to 6, the trustees and the alienees filed three appeals, Appeal Suit Nos.473, 510 and 544 of 1944, as against the decree in Original Suit No.30 of 1943 to the High Court. In an elaborate judgment delivered on 20th December, 1946, the learned judges, who heard the appeals, agreed with the finding of the lower Court that the trustees were liable to render an account of the management of the trust, and as regards the relief for setting aside the alienations, the alienations having been challenged on the ground that they are in favour of one or the other trustees and also for grossly inadequate prices, remanded the suit for a finding as to the market value of the lands covered by the respective sale deeds. In the course of the judgment, with reference to the sales in favour of the trustees, who are also creditors, the learned judges observed that there was considerable force in the contention that whatever might be the legal position, when a transaction of that nature was impugned by the creditors, it would not lie in the mouth of the authors of the trust to challenge the validity of a transaction which was permitted by them by the instrument of the trust, as, under the terms of the trust deed, the trustees were empowered to convey properties to creditors in discharge of their debts.
After remand, the Subordinate Judge took evidence and submitted his findings. After the report the appellants-defendants 1 to 6 filed a petition for “withdrawal of the litigation” and accordingly permission to withdraw the appeal was granted by order, dated 12th December, 1947, and the suit was dismissed with costs of the contesting alienees both in the Appellate and the trial Courts. The plaint in the present suit was presented on 29th October, 1947, the present suit being by three of the creditors on behalf of the general body of creditors, leave to institute the suit having been granted to them under Order 1, Rule 8, Civil Procedure Code. Apparently finding that in view of the observations of the Appellate Court in the judgment in Appeal Suit Nos.473, 510 and 544 of 1944 that it was doubtful whether the authors of the trust themselves can contest the alienations which they have permitted by virtue of the trust, to which they were parties, the plaintiffs were probably prevailed upon to institute the suit for identically the same reliefs, as defendants 1 to 6 asked for in Original Suit No.30 of 1943. The present action is for an account from the seventh defendant, and defendants 11 to 13, as surviving trustee and legal representatives of the deceased Veerabahu Pillai on the basis of wilful default, for all the properties vested in them under the deed of trust, for adjudging the properties described in Schedules I to VII-a and VIII as items of properties still impressed with the trust, to order the administration of the trust by removing the seventh defendant and appointing an administrator to realise the amount due from the trustees on such account-taking and to recover possession of and resell the properties referred to in the Schedules and distribute the properties rateably among the unsecured creditors, and for other reliefs. Several defences were raised to this action. The learned Subordinate Judge, while rejecting the claim for an account, passed a decree declaring that the properties described in Schedules I to III, V VII, VII-a and VIII continue to be impressed with the trust imposed, upon them by the trust deed, removing the seventh defendant and appointing two Advocates as administrators, directing defendants 12, 13, 14, l6 and.
The learned Subordinate Judge, while rejecting the claim for an account, passed a decree declaring that the properties described in Schedules I to III, V VII, VII-a and VIII continue to be impressed with the trust imposed, upon them by the trust deed, removing the seventh defendant and appointing two Advocates as administrators, directing defendants 12, 13, 14, l6 and. 17 to deliver possession of the properties in their respective possession and directing the administrators to resell the same and distribute the sale proceeds amongst the creditors towards the balance of the amounts due and pay the surplus, if any, to defendants 1 to 6. Under the decree, defendants 12, 13, 14 and 16 were held entitled to be paid the respective consideration of the sales and mortgages together with interest, they being liable to account for mesne profits, as per the terms of the decree. The decree is appealed against in Appeal Suit No.720 of 1949 by defendants 14 and 18 to 24. Appeal Suit No.731 of 1949 is the appeal by defendants 12, 13 and 16 and Appeal Suit No.21 of 1950 is by defendants 8, 9, 10 and 17. The seventeenth defendant died during the pendency of the appeal and his legal representatives have been brought on record as appellants Nos. 5 to 9. All the sales are attacked on the ground that as per the terms of the trust deed the properties have to be sold for the highest price, but in fact they were sold for inadequate prices. It will be convenient to deal with these alienations, separately, when the question of the adequacy of the prices can be considered with reference to each sale. But there are certain features about some of the sales which are referred to in the plaint and relied upon to show that they are invalid and not binding on the creditors beneficiaries. We may first take sale of Schedule I property to the fourteenth defendant under Exhibit B-94.
But there are certain features about some of the sales which are referred to in the plaint and relied upon to show that they are invalid and not binding on the creditors beneficiaries. We may first take sale of Schedule I property to the fourteenth defendant under Exhibit B-94. This sale deed as well as Exhibit B-37 of Schedule II properties in favour of the thirteenth defendant are executed by only two out of the three trustees, the third trustee not joining in the conveyance and it is contended that no title could pass under the documents as the third trustee has not joined and that in law the body of three trustees was the owner and the majority could not, in the absence of express statutory authority, convey the legal estate which was vested in all. But, it is urged, that this could not be a legal defect in the conveyance, as the majority has been authorized to act on behalf of the trustees and therefore the sales of the trust properties executed by two only of the three trustees would be binding under the terms of the trust. The question of law that arises as to the scope and extent of the powers of the majority among trustees with reference to trust property requires to be considered with particular reference to the terms of the suit trust. Exhibit B-7, the trust deed, is executed by defendants 1 to 6 in favour of three named trustees, the seventh defendant, Veerabahu Pillai and Narayana Pillai. After referring to the financial position of the family of defendants 1 to 6 and to the fact of losses incurred in the business, it is stated that they are not in a position to properly pay the amount due to their creditors and settle their claims and for that purpose the creditors entered into an arrangement on 8th July, 1930, which is the composition deed.
It is further stated that in accordance with what is agreed upon in the composition deed, namely, that the entire properties belonging to them and their assets and liabilities should be vested in the trustees and they should rateably pay the creditors, defendants I to 6 have executed and delivered the trust deed for the trustees to take possession of the properties and take all other steps and that by means of the document they have vested in the trustees all the properties and have made them belong to them. Under the trust deed therefore all the properties of the family became vested in the three trustees, defendants 1 to 6 divesting themselves of any interest therein and declaring that they belonged to the three trustees. The trustees were empowered to effect alienations such as sale, othi, lease etc at their discretion either by public auction or by calling for sale by private arrangement for the highest amount. Clause 7 states that in the matter of selling immovable and movable properties belonging to the estate, the trustees shall have authority to impose conditions and to sell them either by public sale or by private sale for the highest price, according to their discretion. Clause 8 provides that without selling’ the properties, the trustees shall have the power to distribute or apportion the properties with the consent of the creditors according to the amount payable to the creditors and to execute sale deeds in favour of the creditors. Clause 12 contains an express power given to the trustees as regards the secured creditors one of whom is the fourteenth defendant and the other is the Travancore National and Quilon Bank at Tirunelveli. Clause 12 says that in respect of the debts payable under the mortgage deed executed and delivered to the fourteenth defendant for Rs.30 000 and the mortgage executed and delivered to the Quilon Bank for Rs.10,000 the trustees shall have authority to settle according to their discretion, either by giving property or by making cash payment, or by any other manner as they may deem fit. Clause 15 provides that after the assets of the estate have been completely recovered the amount available after the expenses shall be divided and distributed in equal shares to the unsecured creditors for the amounts due on ascertaining the principal and interest payable up to the date of the trust deed.
Clause 15 provides that after the assets of the estate have been completely recovered the amount available after the expenses shall be divided and distributed in equal shares to the unsecured creditors for the amounts due on ascertaining the principal and interest payable up to the date of the trust deed. Clause 23 deals with the powers of the majority of the trustees to act on behalf of the trust in all matters. Section 48 of the Trust Act and clause 23 of the trust deed are relied upon to support the validity of the sales under Exhibits B-94 and B-37, though they are only by two out of the three trustees. Clause 23 of the trust deed which is in Tamil reads as follows: In our view the correct translation of this clause is as follows:- “In all the proceedings to be taken in connection with this estate you three, either unanimously or according to the decision of the majority shall act.” The meaning of this clause is that, in all matters connected with the trust, the decision can be taken either unanimously or by a majority of the trustees and the majority decision shall be binding on all the trustees, and all the trustees should act in accordance with such decision. That appears to be the reasonable and natural interpretation that could be put on this clause. The nominative of this clause K the three trustees, the predicate being “should act”. This is the view taken by the learned Subordinate Judge and this appears to us to be the proper meaning of the clause reading the clause as a whole. Taking clause 23 by itself, it only means that all the trustees would be bound by the decision of the majority and all steps that are necessary for the execution of the trust, though decided by a majority must be taken by all the three trustees. It is therefore urged that even though two out of the three trustees might decide as to the transfer of any property of the trust in favour of a particular creditor for any sum, the third trustee also is bound by such a decision and all the three trustees should take further steps in implementation of the decision of the majority, that is by executing a sale deed and transferring possession in pursuance of that decision.
But, apart from clause 23 of the trust deed, reference is made to section 48 of the Indian Trusts Act (II of 1882), which says that: "When there are more trustees than one, all must join in the execution of the trust, except where the instrument of trust otherwise provides." It is contended that clause 23 of the trust deed provides that all need not join in the execution of the trust and that two out of the three trustees can not only decide-which decision will be binding on the other trustee-but can, without the other trustee, proceed with the execution of the trust. As to what is execution of the trust in the present case there has been some argument; but the execution of the trust would mean taking all steps that are necessary for the carrying out of the objects and purposes for which the trust was brought into existence, the purpose being the eventual discharge and liquidation of the debts due to the secured and unsecured creditors by distributing the properties among them, which distribution may be effected by transfer of any of the assets to the creditors themselves under clause 8 of the trust deed, and it is urged that if such transfer requires the execution of the sale deed, such sale deed also has to be executed. So, if clause 23 of the trust deed. could be understood to empower two out of the three trustees alone not only to decide but also to act, then by virtue of section 48, the joining of the other trustee may be dispensed with in the execution of the trust. But, since our view of the construction of clause 23 is that the majority can only decide and such decision can be binding on the entire body of trustees but it is the entire body of the three trustees that should act, then any action taken in pursuance of the decision could only be by the three trustees joining together and not by two trustees alone and therefore the further steps to be taken in pursuance of the decision including the execution of the sale deed must be by all the three trustees.
Even if clause 23 is to be construed in favour of the appellants that the trust deed empowers two out of the three trustees not only to decide but to act, it is pointed out that notwithstanding any such express power in the trust deed and the provisions of section 48 of the Indian Trusts Act, any sale deed by only two of the three trustees would not transfer the entire estate in the properties as the properties had become vested in all the three trustees named in the trust Deed and by a conveyance executed by two of the three trustees the interest in the properties which had already vested in the trustees could not be said to be divested. Excepting section 48, there is no other provision in the Indian Trusts Act, which it may be noted is a comprehensive piece of legislation relating to private trusts, that could be relied upon to empower some of the trustees, if there are more than one, to act on behalf of the trust so as to empower a majority to transfer the legal estate in the trust property in favour of others. There are certain provisions in the Act which empower a single trustee to act in particular cases so as to bind the trust. Section 42 empowers a trustee to give a receipt and such a receipt shall be a valid discharge binding on the trust. Section 43 says that two or more trustees acting together may accept any composition, or compromise or compound any debt, or allow any time for payment of the debt and provides also that this power may be exercised by a sole acting trustee when by the instrument of trust a sole trustee is authorized to execute the trusts and powers thereof. Section 44 provides that when an authority to deal with the trust property is given to several trustees and one of them disclaims or dies, that authority may be exercised by the continuing trustees, unless there is anything contrary in the instrument of the trust. Section 47 says that a trustee cannot delegate his office or any of his duties either to a co-trustee or to a stranger, unless the instrument of trust so provides, or the delegation is in the regular course of business or is necessary or is agreed to by the beneficiary.
Section 47 says that a trustee cannot delegate his office or any of his duties either to a co-trustee or to a stranger, unless the instrument of trust so provides, or the delegation is in the regular course of business or is necessary or is agreed to by the beneficiary. It will therefore be seen that the Act does not empower the trustees to delegate their power and the Act has also given specific instances where one trustee out of two or more trustees can act so as to bind the entire trust and none of these provisions confer powers on the majority to deal with trust property by transferring the same. With reference to joint trusts, the following passage from Lewin on Trusts, Fifteenth Edition, at page 190 may be referred to: "In the case of co-trustees the office is a joint one. Where the administration of the trust is vested in co-trustees, they all form as it were but one collective trustee, and therefore must execute the duties of the office in their joint capacity. It is not uncommon to hear one of several trustees spoken of as the acting trustee, but the Court knows no such distinction; all who accept the office are in the eyes of the law acting trustees. If any one refuse or be incapable to join, it is not competent tor the others to proceed without him, but the administration of the trust must in that case devolve upon the Court. However, the act of one trustee done with the sanction and approval of a co-trustee may be regarded as the act of both. But such sanction or approval must be strictly proved." The above passage was cited by their Lordships of the Privy Council in Man Mohan Das v. Janki Prasad1where a question arose as to the validity or binding nature of a mortgage executed by a de facto manager of a charitable endowment their Lordships observed at page 103 that the directions in the Will, which were the subject matter of consideration in that case, did not give to a single Mutwalli any power to execute a deed of transfer nor was such a power given to him by law. The law does not empower a single trustee to convey property so as to bind the other trustee or the cestui que trust.
The law does not empower a single trustee to convey property so as to bind the other trustee or the cestui que trust. The majority of the Court of Appeal in In re Ebsworth and Tidy’s Contract2 held the view that a transfer of property vested in that case in the Official Liquidators by two out of six cannot convey the legal estate vested in all the six. There was an unincorporated company, which did business in money lending on mortgages. The company was acting by their mortgagors. But all the properties were held by certain trustees regulated by the Articles of Association. The trustees were to keep the money, invest it in their names and act according to the directions of the company. The company went into liquidation and the property of the association then became vested in six Official Liquidators under an order of Court. Under section 95 of the Companies Act of 1862 the Official Liquidator has power to sell by public auction or by private contract the property of a company with power to transfer the same. The sale of property in that case was effected by only two out of six. The question having arisen as to the validity of such a sale Cotton and Fry, L.JJ. (Lord Esher, M.R. dissenting), held that the sale did not convey the interest of the Liquidators in whom the property had vested. Cotton, L.J. observed at page 49 as follows:- "Again supposing the legal estate is vested in a trustee for the company, the official liquidators cannot transfer that legal estate. They may no doubt call upon the trustee to transfer it according to their direction, and if he will not do so proceedings may be taken against him to compel him, or an order may be obtained under the Trustee Act for transferring the legal estate.....In my opinion it would be wrong to give to the order which says that the two may do any act which the six could do, the effect of enabling these two to transfer not only such legal estate as is vested in them, but also the legal estate which is vested in the other four......Therefore it is a serious question whether the power of sale or trust for sale in the mortgage enabled the liquidators or any two of them to sell.
I think that the order gave to the two power to enter into any contract which the six might have entered into, though not to transfer any legal estate vested in the six." Fry, L.J., while agreeing with Cotton, L.J. that the entire legal estate had not passed in the circumstances, observed at page 52 that: "It appears to me to be plain, that neither the liquidator nor all the liquidators, nor any one or more of them declared under section 92 to have the same power as the whole body of liquidators, would have the power to divest the legal estate of real property out of any persons in whom it was vested.....Again, supposing the legal estate to be outstanding in a third person in trust for the company, it appears to me to be plain that the powers of the liquidators would not enable them to divest it out of that third person and to convey it.....A power to transfer clearly means (unless the legislature has given it a wider meaning) a power to transfer that which is vested in the persons who transfer, to make over that which they have and not that which they have not, to make over that which is vested in them and not that which is vested in somebody else .... No doubt it may be said that the point is a small one, but at the same time, the possession of the legal estate is a matter of serious importance, and it is impossible for us in the administration of the law of real property as it exists at the present time to diregard it." With respect we consider that these observations will apply with equal force to the law of real property as exists in this country as governed by the Transfer of Property Act of 1882. It is only a person entitled to transferable property and competent to contract that is competent to transfer such property either wholly or in part and in the manner allowed and prescribed by any law for the time being in force and the person who is not entitled to transferable property must have been authorised to dispose of transferable property not his own. This is the effect of section 7 of the Transfer of Property Act.
This is the effect of section 7 of the Transfer of Property Act. It is therefore plain that a person, who is not entitled to transferable property and not having been authorised to dispose of that which does not belong to him, is not competent to transfer such property. Either he must own the property himself or if he is not entitled to the property but purports to transfer the property not belonging to him, he must be authorized to do so and that is by a proper authority obtained under the Powers of Attorney-Act. It is only then that the person who authorizes could be said to have divested himself of the property by reason of his empowering the other to convey the legal estate belonging to him. The note in Lewin on Trusts at page 191 while referring to In re Ebsworth and Tidy’s Contract1states: “Nor can a majority, in the absence of express statutory authority, pass the legal estate which is vested in all.” There is no statutory authority as there is nothing in the Indian Trusts Act to empower two out of the three trustees to transfer the legal estate, and there being no statutory authority, even in India any such transfer by two trustees could not convey the entire estate in the property. In Arnott v. Arnott2a testator devised his estate to his wife and eldest son on trust for sale appointing them as executrix and executor. By a subsequent clause in his will the testator declared that so long as his son should be a trustee of his will, all the powers vested in his trustees should be exercised by his son solely as if he were sole trustee, with complete power of management and of selling and buying and varying investments without the concurrence of or reference to his co-trustee. It was held that the effect of the clause was to vest in the son during his life the powers conferred on the trustees in the earlier clauses of the will as if he were sole trustee, so as to bind the widow to carry out his decisions arrived at in good faith.
It was held that the effect of the clause was to vest in the son during his life the powers conferred on the trustees in the earlier clauses of the will as if he were sole trustee, so as to bind the widow to carry out his decisions arrived at in good faith. In considering the legality of such a power, the Master of the Rolls observed at page 211 as follows:- “There is a difficulty arising in it in this way-that it would not be possible for him alone and without concurrence to exercise all the powers given, for the property is vested in the two trustees; it is actually devised to them so far as the real estate is concerned, and bequeathed to them so far as the personalty, and therefore it would be vested in them both. But, even so, if, for the purpose of exercising the powers and authorities, it became necessary to deal with the property vested in the joint names, my opinion is that it would be for him to dictate-(Mr. Brunskill objected to the milder word ‘request’) what use should be made of it and it would be the duty of the co-trustee to carry it out.” Mr. Bashyam referred to the decisions in Teramath v. Lakshmi3, Kunhan v. Moorthi4, Nethiri Menon v. Gopalan Nair5and Ekambara and Dhandayudhapaniswami Temples v. Arunachala Goundar6in support of his contention that the decision of the majority would be binding on all the trustees, provided it is shown that the other trustees, who were dissentient, were consulted. In those cases what was decided was that the decision of a majority was binding on the dissentient minority provided the act was done after mutual discussion when the minority had an opportunity to record their dissent and then the decision of the majority would be considered to be an act of the whole body. In Nethiri Menon v. Gopalan Nair5it was held that an act of the majority of a body of charitable trustees binds the whole body and a mortgage purporting to be on behalf of all but executed only by a majority of the trustees when the others have declined to join in its execution is binding on all the trustees.
In Nethiri Menon v. Gopalan Nair5it was held that an act of the majority of a body of charitable trustees binds the whole body and a mortgage purporting to be on behalf of all but executed only by a majority of the trustees when the others have declined to join in its execution is binding on all the trustees. This case related to a mortgage and the power of the majority to borrow on behalf of the trust was really under consideration and there was no question of a transfer of the property by sale, when it would be necessary to consider whether the majority can transfer the legal estate in the property on behalf of the trust without the minority joining it. Further, the properties in Nethiri Menon v. Gopalan Nair5belonged to a temple managed by trustees or shebaits. The position of trustees of a charitable and religious trust is different from those of private trusts. In the former case, the property does not vest in the trustees but in the temple or deity and the position of the trustee of a temple is analogous to that of managers but in the case of joint trustees of a private trust, the trustees are the owners and all the properties of the trust vest in them and if any action is to be taken to bind the properties of the trust all must necessarily join. This distinction was pointed out in Sankaranarayana v. Poovanathaswami temple, Koilpatti1where Viswanatha Sastri, J., observed that “as regards co-trustees strictly so called they stand on a different footing from joint managers or shebaits, for the property is vested in all of them; there is unity of title and possession and their interests are joint and indivisible.” Clause 23 of the trust deed read with section 48 of the Indian Trusts Act does not confer any authority on the majority of the trustees to execute a conveyance of the trust property effecting a transfer of the legal estate in favour of the purchaser.
The majority of the trustees have the power to determine and decide upon the course of action to be taken for instance, as to whether a particular property has to be sold for a stated price to a certain creditor and, if the majority decide on the course, that decision will be binding on the other trustee and it will be the duty of the other trustee to carry out that decision, unless he has any objection that the proposed act would amount to a breach of trust or will not be in the interest of the cestui que trust, when it might be open to him to decline to join. The power conferred therefore on the majority under clause 23 is what may be termed “the determining power”, that is the power to determine the course of action and not to act on behalf of the trust. This distinction has to be kept in mind in construing the powers conferred in trust deeds empowering the majority to act on behalf of the minority, since, in the absence of any statutory authority-and there is none in the Indian Trusts Act-the power to act in the case of transferring trust properties could only be exercised by all the trustees joining together. The remedy in such cases would be for the majority of the trustees, who decide upon the transfer of a property to apply to the Court for directions under section 36 of the Indian Trusts Act and it is then for the Court to decide whether the same has to be put through and the dissentient trustee compelled to join in the execution and in case of refusal the court would be justified in empowering the majority of the trustees to execute a conveyance on behalf of the trust, when there can be no doubt that the entire estate in the property conveyed would pass to the purchaser. The following passage from Halsbury’s Laws of England, Second Edition, Volume IV, at page 327 is cited by Mr.
The following passage from Halsbury’s Laws of England, Second Edition, Volume IV, at page 327 is cited by Mr. Bhashyam: “Where trustees or administrators of a charity have power to determine on any sale, exchange partition, mortgage, lease, or other disposition of the charity property, a majority of them who are present at a meeting of their body duly constituted and vote on the question can carry out any of the above transactions as effectively as if all joined, including the official trustee of charity lands”. But this only empowers a majority to determine any of these transactions and. could not be understood to extend that power to enable the majority of the trustees to convey trust property.